Observability software provider New Relic has agreed to a $6.5 billion all-cash deal to go private, led by a consortium headed by Francisco Partners and private equity group TPG.
This move comes amid fierce competition in the application performance monitoring sector, with companies like Datadog and Dynatrace vying for dominance.
The transaction, expected to close by early 2024, will return the San Francisco-based company to private ownership nearly nine years after its debut on the New York Stock Exchange in 2014. New Relic’s software helps monitor and track website and application performance.
New Relic founder and Executive Chairman, Lew Cirne, expressed excitement about partnering with Francisco Partners and TPG, stating their commitment to build upon New Relic’s strong foundation and realize its full potential.
TPG and Francisco Partners managed to resurrect a previous deal that had fallen through by securing sufficient debt financing to meet New Relic’s desired valuation. Major shareholders, including founder Lew Cirne and activist hedge fund Jana Partners, have given their approval for the deal.
As per the agreement, the company will have a 45-day “go-shop” period to consider offers from other qualified bidders. Assuming the deal proceeds as planned, New Relic shareholders will receive $87 per share, representing a 7.5% premium over the stock’s closing price on Friday.
Founded in 2008 by Lew Cirne, the firm offers real-time monitoring software for web and mobile apps, supporting custom-built plugins to collect performance data. The company collaborates with industry giants like IBM, AWS, Azure, and Rackspace, as well as mobile app back-end service providers like StackMob and Parse to facilitate data flow and observability.
Analyst Kingsley Crane from Canaccord Genuity predicts that if the deal goes through, competitors may target New Relic’s customer base for customer acquisition opportunities.